The Business Line Of Credit . Opening The Suggestion Box On Revolving Credit Needs And Choices In Canada

Do You Need Status Quo Or Status Grow When It Comes To
Business Credit Facilities?

OVERVIEW – Information on business line of credit access in Canada . A revolving credit line is critical to business survival and growth





The business line of credit . When it comes to revolving credit facilities in Canada is the ' status quo ' good enough? That status quo is of course your ' existing state of affairs ' and more often than not that ' same old' just isn’t good enough when you're growing or expanding your business.

So we've decided to open the SUGGESTION BOX

today and see what's happening in the world of corporate credit lines, including one solid alternative you might not be aware of. Let's dig in.

Top experts agree this type of borrowing; the ' revolving facility ' is both valuable and critical to your business.

It of course does make sense that our Canadian chartered banks is the one ' go to ' when it comes to business borrowing.

(SPOILER ALERT - ' What, there's another alternative?!) Bank credit is plentiful, flexible, and, top of mind for most business owners and financial managers, low cost! Commercial lending of course is big business when it comes to our Chartered banks.

So what factors determine your ability to get a business line of credit that works for your firm? There are a number, and some are more important than others. As simple as it sounds this includes clearly demonstrating you need one.

If you're in an all cash business with no receivables or inventory, which is the case for many retailers, your company is going to have a hard time demonstrating the need for revolving credit. That’s simply because this type of financing typically funds current assets such as receivables, which don't come into play in retail/cash.

The key to demonstrating your need for a corporate credit line is a cash flow forecast that shows proper assumptions in sales growth and build up in receivables and inventory. It's those assets that typically make up your borrowing base. By the way, we hate to be the bearer of bad news but it is exceedingly difficult to get such financing if you're a start up. Canadian banks are just not set up to take start up risk in corporate credit without strong collateral or equity involvement of the business owner/owners.

What are then some of those key characteristics in business credit? It should be little or no surprise that the banks focus hasn’t changed in a 100 years, and it’s the timeless adage of:

CHARACTER
CAPITAL
CAPACITY
COLLATERAL

Businesses with good commercial credit ratings, track records, and clean financials are always in a position to apply.

What about that alternative though that we mentioned to bank credit facilities. It’s called the ABL, the ' asset based loan / line of credit'. It's non bank in nature, more generous in borrowing power, easier to get 99% of the time and available in all sizes, typically from 250k to the many millions.

There is no doubt any growing company needs the cash or working capital supplied by a business line of credit. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your borrowing needs and alternatives that make sense.




Stan Prokop - founder of 7 Park Avenue Financial


http://www.7parkavenuefinancial.com


Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :


7 Park Avenue Financial = Business Line Of Credit Expertise





Have A Question Or Comment On Our Blog Or Canadian Business Financing Alternatives ?

CONTACT:

7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653
Email = sprokop@7parkavenuefinancial.com























Stan Prokop

Business Credit Line ? ABL Revolving Credit Facilities Turn Bank Lines On It’s Side

Attended Business Credit Line School Yet ? Here’s Your Agenda !

OVERVIEW – Information on bank credit facilities in Canada . The ABL revolving line of credit is one alternative to working capital financing for Canadian businesses . Here’s why and how !





Bank credit facilities ? Have you been to business credit line school yet? After talking to clients about their financing challenges it's safe to say they are hoping to attend, and one of those reasons is the revolving ABL line.

Did you know there's an alternative to the commercial bank business line of credit? It is known by various terms, the simpler being the ABL, or asset based line. An old mentor of ours advises that ‘ tuition is very high in the school of experience ‘, so let’s share some key facts and knowledge in this critical area of business finance in Canada.

This borrowing facility, non bank in nature is a solid alternative to those flexible and low cost commercial lines of credit offered by our Canadian banks. The two major differences - they are more expensive but easier to get. In many cases borrowing power can be increased anywhere from 50-100%.

Clients we talk to always focus on the basics - they are ok with an initial explanation to get them started on a business borrowing facility that in most cases they have never even heard of . So the short explanation is that the non bank ABL lender focuses on your assets in the business, versus your cash flow coverage and equity ratios that are of prime importance to lenders in the banking system.

The main similarity in Canadian bank and ABL lines of credit is that they are typically secured by receivables and inventory. The asset based credit revolver often also adds in fixed assets which are treated in a manner similar to A/R and inventories - ie you can borrow against them on an ongoing basis.

Both banks and the ABL lender use standard borrowing base information to determine how much you can borrow at any given time. It's really a function of your balance sheet assets at the end of the month. Very typical ABL advances are 90% on receivables, and anywhere from 30-70% on inventories. Borrowing for working capital for liquidity on equipment, under the ABL scenario, requires an agreed upon valuation of the assets in question.

We forgive the business client looking to understand ABL for always trying to figure out how their normal day to day banking fits in. The simple answer? It's that you keep you regular bank account set up - funds are deposited as you need them under ABL borrowing. Receipts are placed into a separate account that is created at the bank for your business - this account with your receipts offsets your borrowing.


Remember also that neither bank borrowing or monetizing assets via ABL credit lines add debt to your balance sheet. Your firm is simply cash flowing current assets. It is critical to focus on the fact that both bank and ABL lending simply provide you with a quicker access to cash. We can say the Abl facility, as opposed to the bank has no real upside limit - as you grow sales and assets such as A/R your business line of credit grows with you. Banks by their nature and history and practice tend to run these facilities on set limits with annual reviews.

Pricing on bank and ABL lines is always a key topic of focus for the Canadian borrower. While the majority of asset based lines of credit are more expensive it’s important to remember that you use this liquidity from ABL to grow. You are no longer banking your clients - you're using your receivables to achieve a higher return on investment via better asset turnover. And at the risk of being too obvious you are not always going to be approved for the amount you require under a commercial Canadian chartered bank facility - your odds of approval, for liquidity needs, are much better in an asset based line of credit.

Has the ABL credit line turned traditional bank borrowing on its side? There's certainly a case to be made for that. Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you in differentiating the difference and benefits of various business credit line options.



Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

7 PARK AVENUE FINANCIAL – BANK CREDIT AND ABL FACILITIES




7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Phone = 905 829 2653
Fax = 905 829 2653

Email = sprokop@7parkavenuefinancial.com















Stan Prokop

Take Charge Of Your Business Asset Finance Today Via A Revolving ABL Credit Facility

How To End Your Business Finance Problem Now

Information on ABL Credit and business asset finance in Canada . Let this asset based credit line




We meet a lot of business owners that say they don't necessarily feel ' in charge ' when it comes to business asset finance and their ability to secure a proper revolving line of credit.

ABL credit, i.e. the asset based line of credit via a non bank facility is one way the Canadian business owner can take charge and regain control o their business financing needs .

Asset based lenders exist in a wide variety of forms in Canada... today we're focusing on the true asset based lender that provides, outside the bank environment, business lines of credit .

Where it gets a little confusing for Canadian business is that some day to day terms are intermingled to make this form of finance confusing to some. Trust us, its not confusing!

Hopefully even we can be forgiven for contributing to some of that confusion sometimes, as we have positioned ABL Credit as a non bank solution. But in reality even some of the banks participate in this type of finance via separate boutique divisions within the chartered banks. It's at that time its important to know who to deal with and why.

True asset based lines of credit revolve around one thing, the ultimate liquidation of collateral. Simply speaking the security and liquidity in the business asset finance LOC focuses on the underlying collateral that you're borrowing against. As we have noted in the past that collateral consists of receivables, inventory and equipment for the most part. (Real estate can also be added in sometimes.)

So what’s different about ABL credit when it comes to a comparison to a Canadian chartered bank? The simple explanation is that in a bank line of credit your ratios and covenants have to be performing, as set out and agreed to by the bank and yourself, with a revolving ABL facility you need to ensure those assets are operating, ie turning over, and hopefully growing.

That's probably our most significant point today, that being that your assets secured under the ABL facility must have a solid liquidation and market value. In revolving business asset finance you typically borrow 90% of A/R, and 30-70%, as negotiated for inventory and equipment.

The appeal of Asset based lines of credit is that it pertains, in Canada, to all sizes of firms. While larger facilities tend to be in the millions of dollars a financing program of this manner can be set up for a minimum of 250k if in fact your firm is smaller. But we repeat... essentially there is no upper limit.

Want to regain control and take charge of your business financing. Speak to a trusted, credible and experienced Canadian business financing advisor on how revolving business asset finance can help your firm.


















Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/abl_credit_business_asset_finance_revolving.html

Restart Canadian Business Finance Success With An Asset Based Line OF Credit ! Turbo charge cash flow Via ABL Revolving Lines

Don’t Take Chances By Not Investigating ABL Credit Lines




Information on the Canadian asset based line of credit and the ABL revolving finance facility .How these business lines leverage your working capital and cash flow to the maximum




The ‘times they are a changing; Bob Dylan we're thinking probably wasn’t considering an asset based line of credit finance solution when he wrote his famous song .

Somehow though those words signify a ' restart ' and that’s what Canadian business owners get when they consider asset based finance via revolving credit facilities as a solution for cash flow and working capital needs .

So how does something that seemingly seems the same actually benefit your company so significantly? It's partly related to the external environment out there: traditional forms of business financing in Canada are challenging to say the least, venture capital seems somewhat non existent, and private equity deals take forever to complete if you can find a suitable partner.

Enter the asset based line of credit finance solution! ABL is the acronym for this these revolving lines of credit. They are multi tasking to say the least. Hers some of the things that ABL lines can do : pay out secured existing creditors who have term loans or business lines of credit in place with your firm, eliminate CRA arrears, ( if any ) on the initial advance, and , quite importantly, help you get caught up with valued supplier and vendor related payables.

Oh, and by the way, if you had limited or perhaps no inventory financing in place before as a part of your business line of credit... well, you do now!

The Canadian asset based line of credit marketplace is significantly different from that of the U.S. First of all, we're a smaller country business wise, no surprise there. So there are fewer true ABL type lenders to meet your overall needs. We also logically think that the limited number of players in this market might be one of the reasons you simply have never heard of this solution?!

We keep talking about differences when we compare the asset based loan facility to traditional commercial banking facilities available from our chartered banking system here in Canada. Those differences are quite frankly what make these revolving lines of credit so great.

First of all there is a lot of emphasis on collateral and assets, and less or extremely limited emphasis on outside collateral, personal guarantees, and ratios and covenants.

Additionally, it’s apparently not a perfect world out there, and your firm may be experiencing fluctuations in sales, profits, and balance sheet strength. The reality is that ABL finance is still the solution for your firm if you are in any of the above scenarios.

ABL finance is specialized lending. Firms that offer this service tend to be seasoned companies with significant experience in loaning against your assets. That’s of course not to say the banks are not, but it’s a case of almost micro managing your assets with you, which gives you more borrowing power. These capabilities translate into more working capital and cash flow for your firm, as you benefit from higher advance rates on receivables, inventory margining that actually finally makes sense, and access to unlimited business credit as long as your business is growing .

Investigate ABL. Speak to a trusted, credible and experienced Canadian business financing advisor who can help you determine whether your firm is due for a ' restart ' in Canadian business financing.





Stan Prokop - founder of 7 Park Avenue Financial -



http://www.7parkavenuefinancial.com



Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing .Info re: Canadian business financing & contact details :




http://www.7parkavenuefinancial.com/asset_based_line_of_credit_finance_revolving_lines.html

Why Canadian ABL Asset Based Line Of Credit Clients Win ! Commercial Revolving Non Bank Facilities Work

What’s Different About Asset Based Lending Line Of Credit Capital ?


Information on the commercial revolving capital facility known as the ABL asset based line of credit . What are the advantages and differences of this facility to a bank business line of credit .


If you speak to Vince Lombardi or Charlie Sheen winning is apparently everything. We're not sure that applies in business all the time, but we think we can prove to Canadian business owners and financial managers that an ABL asset based line of credit is as close to the perfect ' winning ' commercial revolving credit facility that you can obtain. Here's why.

An ABL firm is a business to business lender - yes we know that Canadian chartered banks are also that... but they are operating under a totally different set of rules. That is why small, medium and even the largest firms in Canada utilized asset based lines of credit for working capital and cash flow financing.

The essence of an ABL is the financing, to the maximum amount possible, of your receivables and inventory. Medium and larger firms can actually include a healthy component of fixed assets and real estate into that mix.

The extra financing capability that your firm receives from an asset based line of revolving credit (versus the traditional bank facility) gives you choices. What are those choices? Mostly good things - expanding your business... acquiring a competitor or peer, working thru a turnaround scenario. or simply restructuring to get your firm where it needs to be.

But can't we get the same sort of opportunity via a Chartered bank in Canada? ask clients. In fact we agree that commercial credit and lending in Canada via our chartered banks is in fact on the rise, all recent stats back up that statement. However, 2 simple issues come to mind when we talk over these financing challenges with clients - Would you in fact be approved for a facility via a traditional commercial revolving line of credit... and, as germane, would your company get all the financing it needs.

The hard core reality is that many firms we meet actually find themselves out of favor at the bank, they are either ' capped ' to a pre set limit , or find themselves in the very ' unspecial ' feeling that comes from finding yourself in Special Loans . (Trust us on that, special is taken out of context in this financial term in Canada!)

We do agree with clients that in many cases, when all things are equal, bank facilities might seem cheaper from a short term commercial line of credit.

Actually, in numerous instances an ABL asset based line of credit can actually be cheaper than the bank, roughly the same in pricing, or in a lot of instances more expensive financing... but... and its a big but... you have to weigh the fact that ABL delivers more borrowing power allowing you to enjoy discounts with suppliers and to purchase more effectively.

Any commercial or revolving line of credit that allows you not to have to give up ownership percentage is in fact always cheaper than the reality of looking to equity financing, a partner, merger, etc.

In ABL financing your higher borrowing capability comes with only two requirements essentially, you have to have the assets to borrow against, and you must have reasonable financing and reporting controls to validate the significant amounts you are now borrowing.

If you want to explore ABL asset based lines of credit as a solid alternative to funding your company, either temporarily, or permanently speak to a credible, trusted and experienced Canadian business financing advisor who will work with you on an ABL relationship that makes sense.



Stan Prokop - founder of 7 Park Avenue Financial -

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations .Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/abl_asset_based_line_credit_commercial_revolving.html